The All India Consumer Products Distributors Federation (AICPDF), an apex body of FMCG distributors, has sought government guidelines on the proposed GST reforms.
The aim, they say, is to minimise trade disruption and provide clear directives to companies on pricing and stock adjustments following its proposal to reduce the number of tax slabs.
The move comes in the wake of the greenlight given by the Group of Ministers (GoM) on Thursday to the Centre’s recommendation of a two-slab structure as part of its GST 2.0 reforms. The government has proposed scrapping the 12% and 28% tax slabs, retaining the 5% and 18% tax brackets. A 40% tax slab will be included for sin goods.
AICPDF calls for clear guidelines
Writing to finance minister Nirmala Sitharaman on Friday, the AICPDF said the rate rationalisation could impact stock in trade, which could affect distributor margins.
“Large volumes of goods are already present in the trade pipeline and at retail counters. Sudden rate changes, without directives, may affect margins, create disputes, and confuse consumers. We urge the issuance of clear guidelines to manufacturers on pricing and stock adjustment,” the letter said.
Food and beverages currently taxed at 12% could move to the 5% slab if the proposal is formalised at the GST Council meeting slated to be held next month. This will likely reduce the tax burden on several products such as edible oils, rice, butter, ghee, instant noodles, juices, and dry fruits. Home and personal care items could see limited price benefits since these goods fall under the 5% and 18% tax slabs, sector experts said.
Concern over input tax credit (ITC) raised
In its letter, the AICPDF has also highlighted that the transition of input tax credit (ITC) on closing stock is a cause for concern for trade, and distributors and retailers could face financial strain. “We request a proactive framework to ensure rightful credit of ITC so that trade partners are not unfairly burdened,” it said.
The distributor body has also said that demand for soft drinks, treated as a sin good, could be impacted due to high GST. Soft drinks along with products such as tobacco and gutkha have been placed in the 40% GST tax slab.
AICPDF said that soft drinks typically see higher consumption at lower price points of Rs 10 and 20. This could suffer with higher GST.
Source from: https://www.financialexpress.com/business/industry-fmcg-distributors-seek-govt-guidelines-on-gst-reforms-3955227/
